Chuck Butler Currency Round-Up
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Editor’s Note: Yen recovery?… Aussie dollar riding on China’s coat tails… Brazil has it all… British pound back on top…
Japan’s Tankan report, which measures the pulse of the economy, slipped further in the last quarter, but fell less than expected. That’s a good thing for yen… And there was some data in the Tankan that indicated the Japanese economy is doing better than the U.S. I doubt this does anything to move the Bank of Japan to move rates higher though… So… In the end… It’s a wash as far as rate expectations.
But, as I said, it’s a good thing for the yen… And once again today, it is trading with a 105 handle… When the profit taking began yesterday, yen was the first to slip… Which shows me that its not on terra firma one iota!
The Reserve Bank of Australia (RBA) met last night, and left rates unchanged, as most thought they would for now, but did cast a shadow over the A$, when they said that the 17-year economic expansion was showing signs of slowing… Yeah, you think having rates at these high levels for so long has any thing to do with that, RBA? No biggie, as far as I’m concerned though… Australia gets its economic que from China and the rest of Asia… And as long as China continues to post huge economic gains, the Aussie economy will continue to post strong numbers as well. Those strong numbers will keep interest rates high, and the A$ pointed in the right direction.
Did you see that Brazil announced yesterday that they thought they could double their Oil output after discovering a new reserve? I’ve said it before, and I’ll say it again… Brazil seems to have it all going on right now… We’ve seen this type of hype over a country and its economy, etc. before… So, I’ll temper my statements… But, if you’re looking for something that has yield, and feels like a party is going on all the time… That’s Brazil… If that scares you… Then stay away!
Pound sterling hit $2 overnight! This is amazing to me! This currency was all but left for dead, after the Bank of England (BOE) said they were beginning a rate cut cycle, and then made the first cut… But things change, and inflation raised its ugly, errant sheep-biting dewberry head, and suddenly the rate cuts were put on hold… Now, the talk is that the BOE might have to come back and reverse that rate cut… And voila! We have pound sterling back to $2! Who would’ve thunk it?
Source: Profit Taking Dominates The Day
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Tags: Australian Dollar, Brazilian real, British pound, US dollar, yen, Yen Carry TradeAbout the Author
Chuck Butler, is the author of The Daily Pfennig, which is republished at The Daily Reckoning. His respected analysis is frequently quoted in or referenced by: the Wall Street Journal, U.S. News and World Report, CBS Market Watch, USA Today, CNNfn, the Chicago Tribune and many other publications.
The Daily Reckoning offers a "uniquely refreshing" perspective on the global economy, investing and the ability to live well in uncertain times. You will learn what you can expect from today's markets and how to prosper in the face of uncertainty.